Private health insurance vs employer coverage

Who pays the premium

With an employer plan, your employer usually pays a large share of the premium, and your share comes out of your paycheck before tax.

With your own plan, you pay the whole premium. If you're self-employed, you may be able to deduct it — general information, not tax advice.

Who can get it

Group plans accept every eligible employee, regardless of health. Private underwritten plans don't have to.

Portability

Employer coverage ends when the job ends. COBRA can extend it, but at full price.

A plan you own stays with you through job changes, moves within its service area, and career switches.

When leaving a group plan can make sense

• You're starting your own business or going freelance
• Your employer's share is small and the plan is costly for your family
• You need a wider network than the group plan offers
• You're healthy and found a private option that fits better

When it usually doesn't

• Your employer pays most of the premium
• You or a family member has a health condition
• You're expecting a baby or planning one
• You'd lose a valuable HSA or wellness contribution

Making the switch safely

• Get approved for the new plan first.
• Line up the start date with your last day of group coverage.
• Check doctors and prescriptions on the new plan.

Comparing the true cost

Look at what you actually pay, not the plan's full price. With a group plan, that's your paycheck deduction plus deductibles and copays.

With your own plan, it's the full premium plus the same out-of-pocket costs, minus any tax deduction you can take.

Add up a normal year and a bad year for both. If your own plan is close in a normal year but much worse in a bad one, the group plan is usually safer.

If your employer offers money instead of a plan

Some employers offer an allowance, such as an ICHRA or QSEHRA, to help you buy your own coverage. The rules on how it affects ACA subsidies are specific, so ask an advisor before you choose a plan.

Talk it through before you decide

Leaving a group plan is hard to undo. A licensed advisor can compare your employer plan's real cost with private and exchange options, check your doctors, and tell you honestly if staying put is the better choice. There's no fee to you.